Additional Guidance on the PPP Loan Application Process

Please note that this blog is based on laws effective on April 7, 2020 and may not contain later amendments. Please contact Cray Kaiser for most recent information.

On April 6, 2020, The Small Business Administration (SBA), in consultation with the Department of Treasury, issued additional guidance and clarifications on Paycheck Protection Program (PPP) loans. Below is an overview of these clarifications. If you have further questions, please don’t hesitate to contact us at 630-953-4900.

$100,000 Threshold for Employee Compensation

The PPP loan is based on a computation utilizing payroll costs. Payroll costs were broadly defined in the guidance with a threshold of $100,000 per employee, but the recent guidance clarifies the threshold to apply to cash compensation (generally meaning gross wages paid) only. This means that the $100,000 threshold does not apply to non-cash benefits such as group health care coverage, contributions to defined-benefit or defined-contribution retirement plans, or payments for state and local taxes assessed on compensation of employees such as state unemployment. Therefore, a highly compensated individual could have more than $100,000 of payroll costs for purposes of the PPP loan computation.

Federal Taxes such as FICA, Medicare and Income Tax Withholding

In computing payroll costs, you do not need to reduce gross pay for an employee’s withholding such as federal income taxes, FICA or Medicare. However, you cannot increase payroll costs for the employer portion of FICA and Medicare either.

Limitation of 500 Employees or Fewer

A business that has greater than 500 employees is not automatically exempt from participating in the PPP loan. As part of determining eligibility you should consult the regulatory definition of “small business concern” under section 3 of the Small Business Act, 15 U.S.C. This definition provides for computations of size using industry standards and alternative methods such as thresholds related to maximum tangible net worth and average net income. Please visit for further guidance.

Time Period to Use in Calculating Number of Employees and Payroll Costs

Generally, an applicant can calculate the aggregate payroll costs using data from the previous 12 months or using calendar year 2019. However, if your business is seasonal or is just starting, there are specific time periods you would need to use. Please contact us at 630-953-4900 for further clarification.

You can also use the same time period in calculating the average employment for the number of employees. The SBA’s usual calculation is based upon average number of full-time equivalent employees per pay period in the 12 completed calendar months prior to the date of the loan application (or the average number of full time equivalent employees for each of the pay periods that the business has been operational, if it has not been operational for 12 months).

The SBA and Treasury have addressed concerns related to the updated guidance and the effect it has on borrowers and lenders whose applications have already been submitted. At time of loan submission, borrowers and lenders can rely upon the laws, rules and guidance available to them at that time.

We will continue to update you as further guidance is provided by the SBA and Department of Treasury. In the meantime, please contact Cray Kaiser at 630-953-4900 if you need guidance through the application process. We’re here to help!


These are certainly trying times and we want to reiterate that Cray Kaiser is here for you. As things continue to evolve in light of the COVID-19 pandemic, we at CK are taking additional precautions for the benefit of our team members and our clients.

Effective immediately:

  • No clients or guests will be allowed in our suite.
  • All in-person meetings are cancelled. Instead, we will be utilizing phone calls and/or email to communicate with our clients.
  • Our team members are being encouraged to work remotely. All staff are equipped with the appropriate technology and resources to continue to securely and confidentially serve you from home.
  • We will no longer have in-person drop offs of accounting/tax data. Instead, please drop off any packages outside the office door of our suite in the box provided.
  • All paper files, tax returns etc. will no longer be mailed by our office to you. We will be holding these items in our office to send to you at a later date.


We want to remind our clients of our portal access and your ability to safely and securely share your information with our team. We ask that you email to request your portal access. This will eliminate the need for you to drop off your tax information at our office.


Thank you for your patience and understanding during this challenging time. We wish you, your family, and your business health and safety. We will continue to support you as best as we can while keeping each other’s health a priority. If any changes occur during the course of the next few days, we will update our website.

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